Monday, March 30, 2015

Reverse auctions are
back in the news yet again this week, highlighted by recent testimony before the House Small Business committee, in which the
discussion revolved around the proper use of reverse auctions, and potential to
harm both the government and industry without clear guidance and policy.

This is nothing new. Government Accountability Office (GAO) reports were critical of the process, in addition to criticism by the
Small Business Committee’s Contracting and Workforce Subcommittee, which held
a joint hearing with the
Veterans’ Affairs Committee’s Oversight and Investigations Subcommittee.

Firstly, I think reverse auctions are a great tool to save
money, increase competition (especially for small businesses), and speed up
procurement times. However, there is one caveat: when used appropriately.

On that note, one of
the best articles on appropriate usage came from Stan Soloway of the
Professional Services Council, who advised the proper use should come through simple commodity buys where requirements are not to any level of sophistication that
warrant another buying method:

…Reverse auctions and strategic sourcing,
along with the precipitous rise in low bid buying and efforts to create
standardized labor rates that ignore how high performing businesses have to be
run, reflect a broader and disturbing tendency toward commoditizing both people
and capabilities. This trend assumes that the ability to do something minimally
or adequately equates to doing it well, let alone exceptionally well. It understates
the critical importance of historic performance and ignores the reality that
high quality professional services and technology are highly nuanced and
constantly evolving….

I have written about
this issue in the past (click here), and the GAO report
started the salvo of calling into the question the use of reverse auctions
through disturbing findings at the center of testimony provided
by Michelle Mackin, Director of Acquisition and Sourcing Management at the
GAO:

…Competition and savings-two of
the key benefits of reverse auctions cited by the agencies we reviewed-are not
always being maximized… because not all reverse auctions involve what we refer
to as interactive bidding, where vendors engage in multiple rounds of bids
against each other to drive prices lower. We found that over a third of the
fiscal year 2012 reverse auctions had no interactive bidding-and agencies paid
$3.9 million in fees for these auctions…

Of course, one of the main issues with reverse auctions is
the transparency and oversight of the process and the contracts themselves. Dan
Gordon said in his hearing that this function is "inherently
governmental." He also stated:

…FedBid
has an organizational conflict of interest. They control the data. They control
the information," said Gordon. "They have a financial interest in
having as many reverse auctions as possible, regardless of whether the
procurement is suitable for one…

The vast majority of reverse auctions are run through FedBid,
the Vienna, VA, based company that got a slap on the wrist after an inspector
general report from Veterans Affairs exposed major issues with ethics
and business practices.

The most troubling issue is the negative consequences that
happen more often than not to small businesses, as the race to the bottom
continues to put undue pressure on companies that are already struggling to
survive in this hyper-competitive federal market.

I hope that reverse auctions get a thorough review, because
I feel it is doing more harm than good to both the taxpayer, and the firms that
are using this practice in hopes of winning federal business.

The federal government, and contractors that supply goods
and services to the government, do amazing, lifesaving work every day. We normally
take for granted these services, like clean air, safe water, and the one of the
best standards of living in the world.

So why do feds and contractors have such a bad reputation
outside DC?

Well, there is no question that there is a concerted effort,
driven by politics, to denigrate public service and the government itself.
Regretfully, these messages are very powerful, and overshadow those messages of
the important work the government, along with support contractors, currently perform.

However, the two points Mr. Rose makes are both a question
and an enigma:

…Government should be more
aggressive in telling its good news to people who understand it, and want to
hear and repeat it…

No doubt. This is one thing that government does very
poorly. Strategic communications is just something that government apparently
does not seem to do well, especially as it pertains to sustaining a message, and
getting stakeholder buy in.

When the MythBusters initiative launched at the Office of
Federal Procurement Policy (OFPP) in 2011, I had always made it a point to cover
this initiative, as it pertained to market research and communicating with industry,
in classes that I taught to federal project managers. Many students had heard
of this campaign, and the information we covered in the classes resonated well.

A few years later, it is rare that any student has even
heard of the initiative.

One initiative that can hopefully turn this trend around
comes again from OFPP, by way of the Anne Rung, the administrator, who launched a series of podcasts
highlighting successes with some agency's prominent procurements.

The inaugural
podcast featured Mark Naggar, project manager of the Department of Health
and Human Services' Buyers Club. He detailed the use of the TechFAR
Handbook and the Digital Services
Playbook, on which his team built services using agile and iterative
practices to and quickly contract and deliver the development of IT system prototypes.

It is these type of things that government should do more
of, and get the message out there about success government is having.

The second point:

…Companies that sell in the government space
should be more thoughtful about the stories they tell…

This
one is a mystery. Many companies spend substantial resources on creating case studies,
white papers, and discussing their products and services as a part of their marketing.
Nonetheless, the message about their great work seems to be lost in the cacophony
of failures of government, and how contractors are either at fault or guilty by
association.

I
could not agree more with Mr. Rose, as we need more success stories out there from
both sides. They exist, so we all need to help overcome the challenges that missteps
create in exacerbating an already bad public perception.

Sunday, March 22, 2015

This
past week, Office of Federal Procurement Policy (OFPP) Administrator Anne Rung,
released guidance on a new initiative to help improve the acquisition process.
This new initiative, known as Acquisition
360, is a proposed rating system to gather feedback from government and
industry stakeholders on particular IT acquisitions. Ms. Rung’s memo
provided stakeholders the surveys necessary to garner this feedback, but many
questions remain about the utility of this initiative, and whether or not stakeholders
will use the data to actually improve the acquisition process itself.

The
idea is not necessarily new, as it has been compared to a “Yelp” like review
tool to give broad information to give decision makers a high-level view of
potential problems with a particular acquisition at the tactical level. Further, the mechanism was piloted at the General Services Administration with their Governmentwide Acquisition Contract One Acquisition Solution for Integrated Services or OASIS.

Acquisition 360 has review mechanisms
for both industry and government. The surveys are not meant to be a tool to
provide a critique of individuals, but rather, the process itself.

Although
Ms. Rung, and Deputy Administrator Leslie Field addressed some of the questions
about the efficacy of this initiative with Jason
Miller of FederalNewsRadio.com, three fundamental questions remain about potential
for these surveys to be successful:

(1)Will stakeholders actually complete them? – From the government’s perspective, it is yet
more potential paperwork given to overburdened acquisition personnel. Stakeholder engagement may be difficult, even though thoughtful
feedback may pinpoint potential issues that require further root cause analysis
and subsequent re-engineering to address. Nonetheless, this initiative can be
seen as a way to target personnel, or further mechanisms for oversight and
accountability. Although these surveys
will not be used for this purpose, perception can be reality.

(2) Is anonymity ensured? – Although industry covets the opportunity
to provide constructive criticism to improve the overall process to engagement
and doing business with the federal government, firms may be weary to provide
this type of information for fear of possible retribution. Companies often dare
not rock the boat, as retribution can be swift and damaging to a company’s reputation.
Further, the government can certainly make an educated guess about who would be
providing the criticism, based on the circumstances of a particular acquisition.

(3) Will the feedback be useful? – The surveys are
intended to provide comprehensive, high-level feedback on the end-to-end pre-acquisition
process. Assuming thoughtful comments that provide enough information for
decision-makers, will these managers for both government and industry use the
information to improve their internal processes?

The
reality is that the current environment is a type of Cold War, where industry and
government are in a state of almost rampant animosity. It is a vicious circle where
firms are on the offensive with protests and challenges to government procurement,
due to budgetary pressures and ferocious competition for every federal dollar
spent on goods and services. Government has almost battened down the hatches, hoping
to weather the storm of criticism of every move, and thus believing that openness
and transparency through collaboration and communications is a losing proposition.

These
barriers only continue to grow stronger, and productive opportunities to improve
the process through communications continue to be a challenge. However, changes
are desperately needed.

No one is expecting this initiative to be a silver bullet,
but I applaud OFFP and Ms. Rung for proactive action to break the barriers that
hinder constructive change and open the doors to communications.

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About Me

Mr. Gracia is President and CEO of Seville Government Consulting. He is an experienced consultant in government contracting and procurement processes, focusing on small business and government clients. He has 20 years of professional experience providing consulting support for the acquisition, training, and management of services and technology in the government and commercial sector including numerous DoD and Federal civilian agencies. He is a Navy veteran, actively supporting military organizations such as the USO, Soldier's Angels, and serving as CFO for Cigars for Warriors.